"The automobile sector is undergoing intense pressure" or "The automotive industry is facing significant hardship."
German vehicle manufacturers are facing numerous, significant challenges. Stock market analyst Robert Halver from Baader Bank nevertheless predicts a positive turnaround for VW and their colleagues. The current stock performance of automakers is also an enhancement of the market's response.
ntv.de: It's not just VW that's suffering at the stock market, BMW and Daimler shares are also dropping. Isn't that exaggerated now?
Robert Halver: Certainly, there's some exaggeration in the current state of German automakers' stocks. However, this sector is experiencing multiple crises: demand is weak, consumers are favoring savings, politically there's uncertainty about the future of traditional engines and the encouragement of electric vehicles. Additionally, new competitors from Asia are entering the market. German manufacturers are not well-adapted to the fierce competition on the mass market for moderately priced cars. When dramatic news like VW's from last week or BMW's recent profit warning occurs, the entire industry experiences a harsh blow at the stock market.
ntv.de: German carmakers are still making billions in profits. Compared to these profits, the stocks seem very cheap. Is there a risk of default priced in, for example, at VW?
There is no risk of default for German car companies. However, the controversies surrounding VW, the cancellation of long-term location and job guarantees, have triggered a shock reaction, even among investors.
ntv.de: Given the multiple crises you've described: are there any reasons why investors shouldn't sell their German auto stocks immediately? Can they hope for improvement in the foreseeable future?
Panic is never a wise move at the stock market. There's always a new tomorrow – also for the German auto industry. Demand will rebound when the global economy regains strength. Some consumers who postponed their car purchases this year will likely catch up soon if they need a car. However, the structural problems of the industry remain. A return to the good old days when German carmakers were globally leading and unique is unfortunately no longer an option.
ntv.de: Are all German carmakers equally affected by these problems, or are some better positioned for the future than others?
These structural problems affect the entire industry in principle. However, the current weak demand is not impacting premium brands as heavily as mass-market brands. Customers purchasing Mercedes, BMW, Audi, or Porsche are not as price-conscious as clients in the mid-range segment, where competition has become extremely fierce.
ntv.de: When we talk about the crisis of German carmakers, do we have to distinguish between globally operating corporations whose sales markets and factories are largely abroad, on the one hand, and the production location Germany on the other? Are location problems here relevant from a stock market perspective?
As much as it's painful to hear about potential job cuts and factory closures in Germany, from an investor's perspective, it's preferable if companies produce more abroad where costs are lower than in Germany, which has become less competitive due to high labor and energy costs.
Interview with Robert Halver by Max Borowski.
Despite the challenges, German vehicle manufacturers continue to manufacture motor vehicles, attempting to navigate through the weak demand, consumer preference for savings, political uncertainty, and fierce competition from new Asian rivals. The structural issues faced by the industry remain, but some premium brands are better positioned due to less price-sensitive customers.
